Kroger is taking drastic measures to slash prices — and Walmart should be terrified

Business Insider
Kroger is slashing prices and going on a hiring spree.

The grocery store chain recently cut the cost of 1,000 popular items in 120 of its stores, retail consultant David Merrefield writes on industry website The Robin Report. It's also in the process of hiring 14,000 people at its 2,800 stores to boost customer service.

Kroger has annual sales of $115 billion, about half of Walmart's US sales. Still, the retail giant is starting to pay attention.

Walmart is reacting to Kroger's success by investing more heavily in its grocery experience, the Cincinnati Business Courier reports. Walmart is now expanding grocery ordering and pick-up similar to Kroger's popular "Clicklist" service.

"Walmart is going on the offensive," Jim Hagerty, a principal and investment adviser with money management firm Bartlett & Co., told the Business Courier.

Kroger has stores in 35 states, making it Walmart's top grocery store competitor.

Lately, Kroger's executives have been focused on offering more private-label products and cutting unpopular items so they can slash prices and hire more people.

AP

"Kroger has been able to come close enough to Walmart's pricing structure to remain competitive, outperforming any of its industry peers," Merrefield writes. The grocery chain has posted same-store sales gains for the past 50 consecutive quarters.

In addition to cutting prices and shoring up the staff, Kroger is also stocking up on organic food and building stores to rival Whole Foods.

The Kroger Marketplace concept features anything you would find in a Walmart or Target store, but also includes gourmet and prepared foods and alcohol similar to a Whole Foods store.

Business Insider recently toured a Kroger Marketplace store and found customizable gourmet pizzas and craft beers on tap.